Two alternative investment opportunities are available to Claude Reyna, president of Reyna Enterprises. For the first alternative,

Question:

Two alternative investment opportunities are available to Claude Reyna, president of Reyna Enterprises. For the first alternative, the present value of cash inflows is $133,000, and the present value of cash outflows is $127,000. For the second alternative, the present value of cash inflows is $230,000, and the present value of cash outflows is $223,000.
Required
a. Calculate the of each investment opportunity.
b. Calculate the present value index for each investment opportunity.
c. Indicate which investment will produce the higher rate of return.

Net Present Value
What is NPV? The net present value is an important tool for capital budgeting decision to assess that an investment in a project is worthwhile or not? The net present value of a project is calculated before taking up the investment decision at...